Orders of the Day — Budget Proposals and Economic Survey

Part of the debate – in the House of Commons at 12:00 am on 12th April 1948.

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Photo of Mr David Eccles Mr David Eccles , Chippenham 12:00 am, 12th April 1948

We were delighted to hear the hon. Member for Taunton (Mr. Collins) defending agriculture and asking for the things we cannot get. I only hope that the Chancellor of the Exchequer will pay attention to what the hon. Member said. Our Debate has moved into the wider realms of general economic policy, as it was intended to do, and it has not fallen in standard, as the right hon. Member for Bishop Auckland (Mr. Dalton), who is not now with us, prophesied would be the case. I cannot, within the compass of a short speech, deal with every point which has been raised.

I should like to say how much we on this side enjoyed the maiden speech of the hon. Member for Wigan (Mr. R. Williams). He said that confidence was necessary to make an industry a success. I agree with him. If all industries are to be successful, then the whole country must have confidence in the Government. That is exactly what we need today and have not got. The viewpoint from which I would direct the attention of the Committee is the credit of Great Britain, and the aspect I ask hon. Members to contemplate is the balance of payments, to which many Members have already referred.

The British economy under Socialist management has been rightly compared by "The Economist" to a family living beyond its means and coming to the end of its savings. The Government, as the improvident head of that family, have borrowed from every willing lender, and are now selling up the home at a rate which cannot continue. The President of the Board of Trade told us that Marshall aid will give us a breathing space. So it will. For a little time longer, it will be possible to postpone the decision to live within our income, but that decision cannot be postponed in-definitely. Sooner or later, the British people have got to make up their minds to out down and start again at whatever the level may be where both ends meet.

There are two decisions to be taken. The first is when to return to solvency, and the second is how to do it. The timing is all-important. We have not paid enough attention to the effect upon British credit of putting off balancing our overseas account. The family that is running into debt always argue among themselves exactly when they should cut down, and whether it should be before their savings have gone, or after the last stick of furniture has been sold. The Government are in exactly the same position, and have to take precisely that decision. They could continue to make available all the dollars required to meet the sterling area deficits in the Western Hemisphere. They could continue with the import programme into the United Kingdom much as it is today. They could maintain Government and private spending, and capital investment, at levels consistent with the Budget and the Economic Survey. They could continue to do all those things until the last ounce of British gold has been liquidated and the last instalment of Marshall aid had been spent. So far as we know, that is their policy. The President of the Board of Trade disclosed that the gap between imports and exports is as big as ever, so that as far as we know the Government, having obtained Marshall aid, have decided, I suppose for a year or 18 months, to indulge in a second holiday from solvency.

What will happen, if that is their policy, at the end of the holiday? What have we to look forward to? The answer is: a far more severe and cruel collapse in the standard of life than would be necessary if the Government and the nation had the courage to cut down now and to balance the overseas account. I ask the Committee to insist that that return to solvency be made now, in the summer of 1948, for these reasons: so long as our gold reserves are seeping away, there can be no revival of confidence in sterling. So long as there can be no revival of confidence in sterling there can be no sustained, buoyant, permanent expansion of production and of exports. No one can be sure what our money will be worth in six or 12 months' time. I those conditions permanent expansion of output cannot take place.

We ought to face the fact that a nation living on capital is a bad risk. Today, foreigners will not hold pounds and that means, among other things, that they will not invest in the sterling area, where it is so necessary that investment should be made, because they do not consider that the official rate of the pound reflects the credit of a nation galloping through its final reserves. At home, those who are responsible for other people's money, and other people's employment, are in growing doubt and anxiety as to how to prepare for a day of reckoning from which they see no escape. Wage earners, protected from that anxiety while they did not know the truth, are now beginning to learn the truth and, therefore, share the anxiety, unaccompanied by any hope. This is a demoralising state of affairs, and must he stopped. It cannot be ended unless the Government are willing to abandon their wishy-washy mixture of targets for industry and exhortation for the workers.

I want to be fair. I know that targets do perform useful functions, and that Ministers have made many sincere appeals for savings, hard work and self-discipline. But hon. Members know all about these appeals. We can say what we like on the platform, but we know that the results have been poor. My hon. Friends will agree that that is not surprising, because the party opposite are not in a strong position to ask anyone to work five and a half days for five days' pay. That, in fact, is one of the hard things that sooner or later will have to be done. The party opposite came into power committed to put their domestic Socialism in front of the great issues of national survival, and they have stood by their commitment. How have they done it? The bitter truth is that temporarily they have fulfilled their undertaking to make life easier in the poorest homes, but only with vast subventions from America and enormous inroads into our accumulated reserves. That truth, for two years, was hidden by concessions to expediency and prejudice, and irreparable damage was done because invaluable time, which we can never recapture, has been lost.

I can give the Committee an example of that damage. People are now saying, and many wage earners among them, that nothing will arouse the nation except the brutal shock of hunger and unemployment. We hear more and more voices prophesying that all our gold and aid from America will be swallowed up in living beyond our means, until the hour comes when we have nothing to supplement our current earnings, and we are forced on to a cash basis, with all the disastrous consequences that must follow. It may be that events will have to take this humiliating and tragic course. If so we shall have failed as a free and experienced nation to govern ourselves, and the example of that failure upon the rest of the world may well be decisive in the struggle between Communism and free institutions.

We have only a short time left in which to prove that misery and suffering are not the only sirens that can arouse the British people. I constantly ask myself whether there is any way in which this degrading awakening can be avoided. It may well be an awakening fatal to liberty. I ask myself whether any other kind of leadership or policy can succeed where Socialist planning has broken down, as the right hon. Member for Aldershot (Mr. Lyttelton) illustrated so well in his speech. I find that this is a problem which cannot be answered in terms of finance and economics alone. I hope that the Committee will allow me to deal with it as I see it—and that is as a crisis of character and spirit.

At the end of every war, public morale always slumps. The temperature of patriotism comes tumbling down when the strain of battle and defence is suddenly removed. That always happens, and, at such a time, a wise Government would do all it could to counteract the inevitable decline in vigour and virtue of the public. After World War II we have not had a Government wise in this respect. In fact, to an impartial observer it would appear that the Socialist Government have often acted as if it were their duty to undermine the character of the people, drugging us with too much money, and by their excess of controls, depriving us of that sense of personal responsibility which always brings out the best in British men and women. The Committee will be aware that the sense of duty has been weakened in all sections of the population. At one end of the income scale wages have risen faster than goods came into the shops, and the evil consequences of that process were deliberately concealed for two years at least by adding to the subsidies, by drawing on our stocks and by spending the American Loan at breakneck speed. Even today, if one goes into a factory, one will find men who do not understand how artificial has been the standard of life which they have enjoyed as part of the national holiday from solvency.

At the other end of the income scale things have been just as bad. Cheap money has forced up the prices of stocks and shares, and stupid as well as clever speculators have been living like the Government—without shame beyond their income, and spending the inflated increments of their capital and enjoying it. These are the people who might well raise a statue to the right hon. Member for Bishop Auckland. He is their friend. I wonder how many of them and of the wage earners even now are saying to themselves, "If this is an economic crisis, may it continue for ever."

The inflation of incomes and capital values has made us feel as though we were much richer than we are and this inflation has been the cause of the controls. It is always necessary to get things the right way round. We should not have controls, or at any rate a good many of them, but for inflation. Controls and allocations, ceiling prices and guaranteed margins are taking away from the men who might lead our recovery a sense of responsibility in the outcome of their own businesses. Either they make a profit much too easily or they incur a loss through no fault of their own. That vital link between the effort which a man puts out and the result he achieves is being destroyed. He has to gamble where he would willingly invest. He has to trade from hand to mouth where he ought to be looking far ahead. There is no denying that the controls and regulations under which Socialist management has forced private business to operate in the end will demoralise the character of those engaged in business, if they have not already done so.

This is a very unfavourable climate in which to attempt a return to solvency, but none the less I am convinced that attempt must be made. It could be done it we stood firmly on three principles. First, every citizen to bear some part of the sacrifice and each person's sacrifice to be seen to be just in proportion to the capacity of the bearer. Any economic policy which puts all the burden on one class would fail. I go further and say that no policy could save us unless it commands the support of all classes. Second, in proportion as we must cut down now we must be given solid grounds for hoping that what we give up in the present we shall get back and surpass in a measurable time. I claim that the reason this Government cannot face up to the difficulties and trials of a return to solvency is precisely because the nation as a whole does not believe they are capable of restoring our fortunes at any date.